Know the Law: Which Law Binds You Based on Business Type

Depending on the type of business you own, different Florida statutes will govern. Without knowing what law applies to their business, many business owners may be violating the law or failing to live up to the requirements of the state without realizing it. Different rules will govern depending on the applicable statute, and therefore the importance of understanding what rules apply to your business cannot be understated.

Partnerships. Partnerships are the most informal type of business, and many partners do not even realize they have entered a partnership. This is because no formal partnership agreement is needed. In Florida, the Florida Revised Uniform Limited Partnership Act (“FRUPA”) governs partnerships. This is Florida’s adapted version of the Revised Uniform Partnership Act. FRUPA is codified as Chapter 620 in the Florida Statutes. Chapter 620 provides default rules for partnerships in the absence of a partnership agreement to the contrary.

Corporations. Corporations are the most complex type of business. This is due to the special protections it receives, including limited liability and different tax treatment. The Florida Business Corporation Act, codified as Chapter 607 in the Florida Statutes, governs corporations in Florida. Chapter 607 provides default rules for a corporation’s bylaws.

Limited Liability Companies. Limited liability companies, or LLC’s, are a relatively new phenomenon in the business world. Limited liability companies can be considered a hybrid of partnerships and corporations. They provide limited liability, as the name insinuates, but do not mandate strict formalities and procedures of corporations. The Florida Revised Limited Liability Company Act, codified as Chapter 605 in the Florida Statutes, governs the default bylaws of limited liability companies.

Understanding what laws govern your business is crucial. Abiding by the appropriate laws will determine how much liability you expose yourself to with the state, and what protections your company receives. The above three mentioned statutes provide default rules and procedures for your company. Many statutes can be long-winded and provide complex rules. Consulting an experienced business legal team can help best understand what is necessary for your company. Call the Trembly Law Firm at (305) 431-5678 today to schedule a consultation.